The UK Budget announced on 26 November 2025 includes several measures that will affect self-employed driving and rider instructors.
Here are the main points to be aware of:
Fuel Duty
Extending the 5p fuel duty cut until September 2026 with rates then gradually return to March 2022 levels by March 2027. The planned increase in line with inflation for 2026-27 will also be cancelled.
Fuel Price Transparency: The introduction of ‘Fuel Finder’, which aims to improve the price transparency of fuel buying in the UK, which is explained in more detail here: https://www.petrol-prices.co.uk/articles/fuel-finder-new-government-scheme-that-could-help-you-save-at-the-pump
From Spring 2026, UK consumers will be able to compare fuel prices more easily through the Department for Energy Security and Net Zero’s open data Fuel Finder scheme, encouraging competitive pricing among retailers, with analysis suggesting UK households could save an average of around £40 a year. Clearly this will be welcome news for driving instructors!
Electric Vehicle Tax
Besides fuel duty remaining frozen until September 2026, a new ‘pay-per-mile tax’ for electric and hybrid vehicles will start from April 2028 (at 3p per mile for EVs).
The government is introducing Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing Vehicle Excise Duty.
While it is fair for EV drivers to contribute for their car usage in the same way as those driving petrol and diesel cars, the government is ensuring that driving an EV remains an attractive choice for consumers, and the tax paid by EV drivers will be around half the fuel duty rate paid by the average petrol/diesel driver, with a reduced rate for plug-in hybrid drivers.
When eVED takes effect in April 2028, an average EV driver will pay around £240 per year or £20 per month. Other vehicle types, such as vans, buses, motorcycles, coaches and HGVs, will be out of scope of eVED when it is introduced, with the transition to electric power for these vehicle types being currently less advanced than for cars.
Electric Car Grant
Launched in July this year, it has already helped over 35,000 drivers to make the switch to an EV by giving up to £3,750 off eligible EV models. The government is boosting the programme with an additional £1.3 billion of funding and extending it to run until 2030 to support more people to switch.
Tax Threshold Freeze: Income tax and National Insurance thresholds remain frozen until 2031, meaning more of your income could fall into higher tax bands over time (“fiscal drag”).
Dividend Tax Increase
If you operate through a Limited company and pay yourself via dividends, tax rates will rise by 2% from April 2026.
Making Tax Digital: Digital reporting on a quarterly basis for Income Tax Self Assessment will apply from April 2026 for those earning over £50,000, from April 2027 for those earning over £30,000 and from April 2028 for those earning over £20,000.
For full details of the Budget, please visit: https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html
These changes could impact your take-home pay and business planning. DIA recommends reviewing your provision for taxes payable and budgeting for the potential cost increases. You can use Sky’s Budget Calculator to help: https://news.sky.com/story/budget-2025-calculator-see-how-your-finances-have-changed-by-rachel-reevess-announcements-13475747
If you need any help or assistance in getting ready for quarterly tax submissions to HMRC for MTD from April 2026 (or later), please contact the DIA Tax Service and we will be happy to help.
